Corporate Governance

Declaration of Compliance with the German Corporate Governance Code

Pursuant to section 161 of German Stock Corporation Law, the Supervisory and Management Boards of KOENIG & BAUER Aktiengesellschaft herewith declare their compliance with the principles of the German Corporate Governance Code, as amended on 24 June 2014, with the following deviations:

At present the policy excess borne by members of the Supervisory Board for D&O liability insurance of €2,500 is lower than is recommended in provision 3.8 of the Code. We have no plans to adjust the excess to a minimum of one-and-a-half times the fixed annual remuneration because our Supervisory Board discharges its duties with conscientious dedication at all times and in full, irrespective of the level of such excess.

In the new Management Board member contracts drawn up in 2014 payments to members of the Management Board upon premature termination of Management Board duties without serious cause by KBA during the contract duration are limited to an amount corresponding to three years’ fixed remuneration including fringe benefits. Provision 4.2.3 of the Code recommends a severance pay cap of two years remuneration. As the payments are limited to the fixed basic salary Koenig & Bauer AG generally places an even stricter limit on the severance pay cap when drawing up contracts.

Provision 4.2.5 of the Code stipulates that additional disclosures shall be provided in two reference tables with regards to the individualised disclosure of Management Board remuneration. The AGM passed a resolution against the disclosure of individual Management Board remuneration on 16 June 2011 for the period ending with the 2015 business year. Accordingly, we waive the recommended disclosure of this additional information.

No individual Supervisory Board remuneration has been disclosed (provision 5.4.6). However, the total sum has long been stated as fixed and variable components. We believe that this, together with the information on the remuneration agreements fixed in the articles of association and described in the management report, is largely an assessment of the adequacy of Supervisory Board remuneration and of the individual amount of remuneration possible.

Supervisory Board remuneration contains appropriate adjustments for the chairman and vice-chairman, but not for committee work, since this is covered by the raised annual remuneration (provision 5.4.6) agreed a few years ago.

The individual equity holdings of the members of the Supervisory and Management Boards are not disclosed (provision 6.3). In our opinion the separate disclosure of the total equity held by the Supervisory Board and by the Management Board adequately addresses investors’ information requirements.

Since issuing the last declaration of compliance in February 2014 and its supplement in November 2014, KOENIG & BAUER Aktiengesellschaft has complied with the recommendations of the Government Commission on the German Corporate Governance Code, as amended on 13 May 2013, with the following exceptions: the policy excess borne by members of the Supervisory Board for D&O liability insurance is lower than one-and-a-half times the fixed annual remuneration (provision 3.8). The severance pay cap was not limited to two years remuneration (provision 4.2.3). No individual Supervisory Board remuneration and Board equity holdings have been disclosed (provisions 5.4.6 and 6.6). The committee work of the Supervisory Board is not remunerated separately (provision 5.4.6).